If your organization wants to obtain recognition of exemption as a
credit union without capital stock, organized and operated under state
law for mutual purposes and without profit, it should file an
application including the facts, information, and attachments
described in this section. In addition, it should follow the
procedures for filing an application described in chapter 1.
Federal credit unions organized and operated in accordance with the
Federal Credit Union Act, as amended, are instrumentalities of the
United States, and therefore, are exempt under section 501(c)(1). They
are included in a group exemption letter issued to the National Credit
Union Administration. They are not discussed in this publication.
State chartered credit unions and other mutual financial
organizations may file applications for recognition of exemption from
federal income tax under section 501(c)(14). The other mutual
financial organizations must be corporations or associations
without capital stock organized before September 1, 1957, and operated
for mutual purposes and without profit to provide reserve funds for,
and insurance of, shares or deposits in:
- Domestic building and loan associations,
- Cooperative banks (without capital stock) organized and
operated for mutual purposes and without profit,
- Mutual savings banks (not having capital stock represented
by shares), or
- Mutual savings banks described in section 591(b).
Similar organizations, formed before September 1, 1957, that
provide reserve funds for (but not insurance of shares or deposits in)
one of the types of savings institutions described in (1), (2), or (3)
above may be exempt from tax if 85% or more of the organization's
income is from providing reserve funds and from investments. There is
no specific restriction against the issuance of capital stock for
these organizations.
Building and loan associations, savings and loan associations,
mutual savings banks, and cooperative banks, other than those
described in this section, are not exempt from tax. However, certain
corporations organized and operated in conjunction with farmers'
cooperatives can be exempt.
Application form.
The Internal Revenue Service does not provide a printed application
form for the use of organizations described in this section. Any form
of written application is acceptable as long as it shows the
information indicated in this section and includes a declaration that
it is made under the penalties of perjury. The application must be
submitted in duplicate.
State-Chartered
Credit Unions
Your organization must show on its application that it is formed
under a state credit union law, the state and date of incorporation,
and that the state credit union law with respect to loans,
investments, and dividends, if any, is being complied with.
A form of statement furnished to applicants by the Credit Union
National Association is acceptable in meeting the application
requirements for credit unions, and may be used instead of the
statement form of application just described. The following is a
reproduction of that form.
Claim for Exemption from Federal Income Tax
____(Date)
The undersigned
________(Complete name) Credit Union, Inc.,
________(Complete address, including street and number), a credit
union operating under the credit union law of the State of
______, claims exemption from federal income tax and supplies
the following information relative to its operation.
- Date of incorporation
____.
- It was incorporated under the credit union law of the State
of
______, and is being operated under uniform bylaws adopted by
said state.
- In making loans, the state credit union law requirements,
including their purposes, security, and rate of interest charged
thereon, are complied with.
- Its investments are limited to securities which are legal
investments for credit unions under the state credit union law.
- Its dividends on shares, if any, are distributed as
prescribed by the state credit union law.
I, the undersigned, a duly authorized officer of the
________Credit Union, Inc., declare that the above information is
a true statement of facts concerning the credit union.
Signature of Officer
______Title
______
Other Mutual
Financial Organizations
Every other organization included in this section must show in its
application the state in which the organization is incorporated and
the date of incorporation; the character of the organization; the
purpose for which it was organized; its actual activities; the sources
of its receipts and the disposition thereof; whether any of its income
may be credited to surplus or may benefit any private shareholder or
individual; whether the law relating to loans, investments, and
dividends is being complied with; and, in general, all facts relating
to its operations that affect its right to exemption.
The application must include detailed information showing either
that the organization provides both reserve funds for and insurance of
shares and deposits of its member financial organizations or that the
organization provides reserve funds for shares or deposits of its
members and 85% or more of the organization's income is from providing
reserve funds and from investments. There should be attached a
conformed copy of the articles of incorporation or other document
setting forth the permitted powers or activities of the organization;
the bylaws or other similar code of regulations; and the latest annual
financial statement showing the receipts, disbursements, assets, and
liabilities of the organization.
Previous | First | Next
Publication Index | 2001 Tax Help Archives | Tax Help Archives | Home
